Financial Times FT.com [image: FT.com logo] COMPANIES Asia-Pacific Indonesia oil group calls for modest flotation<http://www.ft.com/cms/s/82e45d2e-ace2-11db-9318-0000779e2340.html>
By John Aglionby in Jakarta Published: January 26 2007 02:00 | Last updated: January 26 2007 02:00 The head of Pertamina yesterday called for at least a modest initial public offering by the end of the next year to help transform Indonesia's state-owned oil and gas company. Ari Soemarno, who has been widely praised for his reforms, said the target was "very ambitious" considering the extent of the 50-year-old company's corporate, operational and financial problems. Pertamina has been a cash cow for governments for decades to finance completely unrelated projects. But Mr Ari said an IPO, however limited, would greatly benefit Pertamina, forcing the company "to become even more transparent, more efficient and more professional". He estimated market capitalisation would be about $30bn by the end of next year. Sri Mulyani Indrawati, Indonesia's finance minister, later told the Financial Times that an IPO in 2008 was "a possibility", adding that the government was "in the process of establishing Pertamina's balance sheet. Once it is done, they will be ready to take any corporate action." However, Ms Indrawati added, a flotation would have to be discussed by the government's privatisation committee. Any moves to float the company would run counter to the wishes of Susilo Bambang Yudhoyono, Indonesia's president, who is thought to prefer waiting until after the general election scheduled for 2009. Analysts say Mr Ari, who took over as Pertamina's president last March, has proved a breath of fresh air as head of the company - hiring consultants from McKinsey and Schlumberger and implementing what he calls a "rigorous transformation programme". His immediate goals include publishing an up-to-date financial statement, having it audited and getting the company rated. Kurtubi, director of the Centre for Petroleum and Energy Economic Studies, said it would be safer for Pertamina to raise financing through bank loans, the debt market or co-operation with other oil companies. Mr Ari said he wanted to raise $500m in loans in March and hopefully issue bonds this year or early next year. He said he hoped to book Rp23,000bn ($2.5bn) in profit this year, up from Rp21,000bn last year. About 40 per cent of this would be from downstream activities. The government takes up to 45 per cent of the profit as a form of dividend while the rest is ploughed back into the company. Oil and gas production is expected to be the equivalent of 240,000bpd this year, with 155,000bpd from oil and the rest from gas. Copyright <http://www.ft.com/servicestools/help/copyright> The Financial Times Limited 2007 "FT" and "Financial Times" are trademarks of the Financial Times. Privacy policy <http://www.ft.com/servicestools/help/privacy> | Terms<http://www.ft.com/servicestools/help/terms> (c) Copyright The Financial Times<http://www.ft.com/servicestools/help/copyright>Ltd 2007.
